What Might the Launch of the Amazon Spark Social Media Platform Mean for U.S. Retailers?
The official launch on July 17, 2017, of the Amazon Spark social media platform — initially for Amazon Prime members with iOS phones — may herald even more competition for both online and offline retailers. Now in a potentially game-changing move Amazon can employ social media and social proof to encourage product purchases directly on Amazon.
Amazon Spark uses user-generated content to promote discovery of its own products, which gives Amazon yet another advantage in the competitive arena of online and offline retailers. And does this mean that all retailers will now have to sell through Amazon or be left out in the cold?
Here is an example of how it works with a posting to the Amazon Spark social media platform by travel and lifestyle blogger Sarah Kim. First the photo is displayed and then click to see the additional views of the photo with product information:
- Photo on Spark (with shopping bag icon and number 4 in bottom righthand corner indicating 4 separate products identified in photo)
- Photo with information/Amazon link on skirt
- Photo with information/Amazon link on top
- Photo with information/Amazon link on sunglasses
- Photo with information/Amazon link on hair curling wand
Note: From our experiments here at Enplug we determined that, although you have to be a Prime member and have an iOS phone in order to post to Spark, any Amazon customer can view the Spark feed on iOS phones. Here is what we learned on the Amazon site:
We invite all customers to enjoy the posts on Spark. To participate you must meet Spark Eligibility Criteria.
Spark Eligibility Criteria:
To contribute to Spark, you must have a paid Prime subscription (free trials do not qualify) and make a minimum amount of valid debit or credit card purchases. Prime subscriptions and promotional discounts don’t qualify towards the purchase minimum.
Clearly this striking visual social proof, especially from people with large online followings and available for any to see, can strongly impact the balance of retail competition.
Sarah Perez in the July 18, 2017, TechCrunch article “Amazon launches Spark, a shoppable feed of stories and photos aimed at Prime members” explained Spark as a “… a new feature aimed at improving product discovery, which is seemingly inspired by Instagram and its use of shoppable photos. Similarly, Amazon Spark users are encouraged to post stories, ideas and images of products they love, which others can react to with comments and “smiles” – Amazon’s own version of the Like or Favorite button.”
Angela Moon in the July 19, 2017, Reuters article “Amazon launches shopping social network Spark for iOS” said, “Spark … encourages users to share photos and videos, just like popular social media platforms Instagram and Pinterest. Spark users can tag products on their posts that are available on Amazon and anyone browsing the feeds can instantly find and purchase them on the platform.”
While features on Instagram, Pinterest and Facebook may all have contributed to the inspiration for Spark, the China connection may have come first.
The influence of China — or where the driving force for Amazon’s Spark may have started
Paul Mozer of The New York Times reported in an August 2016 video “How China Is Changing Your Internet”:
In China, a sheltered internet has given rise to a new breed of app, and American companies are taking notice. What was once known as the land of cheap rip-offs may now offer a glimpse at the future.
This app — WeChat — owned by the Chinese company Tencent (a Chinese investment holding company with subsidiaries in areas including media, entertainment, payment systems, and the internet) is an all-in-one social and purchasing online network that may be a prime driving force behind Amazon’s launch of Spark.
Will all retailers now need to sell through Amazon or risk being left out in the cold?
A recent holdout from selling on Amazon capitulated in June, as Sara Germano in the June 29, 2017, Wall Street Journal article “Nike Confirms Partnership With Amazon” reported:
Nike chief executive said the company is starting a pilot program to sell sneakers through Amazon.com Inc., ending a long stalemate between the sportswear giant and the online retailer. Nike CEO Mark Parker said that Amazon would carry “a limited Nike product assortment” of footwear, apparel, and accessories, and that Nike was seeking to improve its presence on the e-commerce site.
Now even Sears is getting into bed with Amazon, as reported by Suzanne Kapner and Laura Stevens in the July 20, 2017, Wall Street Journal article “Sears to Sell Kenmore Brand on Amazon”:
For years, the only place Americans could buy a Kenmore stove or washing machine was at their neighborhood Sears or Kmart.
But there are fewer of those sprawling stores these days—nearly 1,000 have closed since 2009—and people aren’t buying as much from them. Purchases, even for bulky or expensive items, are shifting to Amazon.com Inc., which has become the start of most shopping trips.
That is one reason behind Sears Holding Corp.’s decision to start selling its Kenmore appliances on the Seattle giant’s website, the first time it will offer its in-house brand at a major rival.
Spark and data collection — the more Amazon knows about you the better its recommendations can be
Of course the launch of the Amazon Spark social media platform gives Amazon one more data collection avenue on its presumably biggest Amazon spenders — the Prime members who get free two-day shipping and other benefits for an annual subscription fee.
Due to all the free services provided in Prime, Amazon already can collect numerous data points from music preferences (Prime Music) to how often you reorder toilet paper (Amazon Dash for Prime).
With extra data points from Spark, Amazon can now become an even better shopping source for Prime members, thereby potentially drawing away more business from other online and offline retailers.
Where do U.S. antitrust laws figure into the Amazon funnel?
As Amazon extends its tentacles into more and more American business, is there a fear that U.S antitrust laws will stop Amazon’s voracious appetite?
According to Peter Cohan in the July 17, 2017, Forbes article “Don’t Bet That Antitrust Will Sink Amazon Stock”:
A member of Congress and a hedge fund manager are among those who believe that Amazon’s growth will be capped by enforcement of antitrust laws. While this threat might boost the coffers of antitrust lawyers, the legal basis for such fears is weak.
Cohan references Spencer Soper’s July 14, 2017 Bloomberg article “Amazon Antitrust Concerns Emerge in Washington and Wall Street” that begins:
Amazon.com Inc.’s expansion plans, including its agreement to buy Whole Foods Market Inc. for $13.7 billion, are raising hackles in Washington — and Wall Street is taking notice.
It is too soon to predict whether these antitrust concerns will place obstacles in the way of the Amazon juggernaut. Yet both online and offline retailers should not wait to be gobbled up by the Amazon behemoth.
Forbes contributor gives scathing review to Amazon Spark
Theo Miller rants in his July 24, 2017, article “Amazon’s New Social Network Crushes My Soul”:
Spark feels like a desperate support group that meets up at an indoor mall once a week. There’s nothing inspired, cultured or unique about the experience. It’s a shotgun marriage between social media and consumerism. Other social networks have ads, but Spark exists to sell.
Almost every social platform is commercial, but none of them are this cynical. Twitter emerged from an earnest desire to connect people through new technology. Amazon is only as inspired as its bottom line permits it to be.
With any luck, Spark will go the way of iTunes Ping. Social networks are not marketing schemes. They don’t work as add-on services. They have to attract users in a human way to succeed. While it’s authentic for Amazon to seek growth, Spark’s too inauthentic for end users to enjoy.
Retailers can adopt new marketing strategies to face off against Amazon
Retailers can start with checking themselves out on selling basics, such as described in retail consultant Bob Phibbs’ article “Retail Sales Training: 9 Ways To Get Better At Selling”. One piece of his advice is:
You don’t stop learning to be a salesperson when your training is over—it’s an ongoing process. Why? Because great salespeople are students of behaviors. … Great retail salespeople treat each customer as an opportunity to learn what works and what doesn’t, and they always look for ways to improve.
After retailers are confident that they are excellent in the basics such as learning from their mistakes, the next step for retailers is to keep current with trends in the marketplace as well as technology that can capture target audiences.
Jennifer Beese in the Sprout Social article ”The Modern Guide to Social Media for Retail” says:
In order to drive in-store traffic offline, nowadays you have to execute your strategy online. It might feel counterintuitive, but 90% of shoppers turn to social media for retail and often look for help with buying decisions. With that shift, consumers paved a new purchase journey for retailers to follow.
You can utilize that same social media to generate social proof for your retail locations with digital signage such as Enplug’s Social Media Wall App and Instagram App. People love seeing themselves on screen in real time.
In conclusion, now that Amazon is using its own social media platform to motivate purchases, retailers can “fight back” by maximizing their use of social media to drive social proof for their businesses. This strategy could help retailers mitigate the impact of Spark!